SA option holds water

Julia Gillard
has reaffirmed the Labor government’s commitment to assembling the next generation of ­submarines in Adelaide, sparking calls to consider a proven off-the-shelf option and not only a local one.

The call came yesterday after the Prime Minister unveiled a $214 million package for design and engineering studies as well as an industry skills plan to back the project.

Analysts suggest an Australian-designed and built fleet of 12 new submarines could cost as much as $36 billion, while an off-the-shelf European fleet option such as the German-developed HDW Type 214 or 216 or the French-made DCNS Scorpene could cost as little as $9 billion and be ­delivered decades earlier.

Although Ms Gillard insisted an off-the-shelf submarine was one of the options, requiring only modification to meet Australian regulatory ­re­quirements, she reaffirmed that submarines would be assembled in Ade­laide at submarine builder ASC whatever the design choice.

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“You need to know whether the cost of building the submarines here ­justifies the added costs when weighed up against the benefits in terms of jobs,’’ Dr Thomson said.

The cost of building ships in South Korea, for example, is about 30 per cent cheaper than in Australia. But Dr Thomson said that in reality it was a “political dead end’’.

“Both sides of politics are committed to assembling the submarines in South Australia.’’

Both the federal and South Australian governments have invested heavily in facilities in Adelaide to undertake the project.

Economist Henry Ergas welcomed the government’s announcement but said there was a case for reviewing assumptions underlying the entire new submarine project.

“A genuine off-the-shelf submarine should be an option along with the modified, Australianised or wholly Australian-designed and built op­tions,’’ Mr Ergas said.

“It might not have all the capabilities you want but it would enable an assessment to be made of the forgone capabilities compared to the cost.

“Frankly, I do not see how the government can know that 12 submarines is the right number either and I would like to see some science applied to that,’’ Mr Ergas said.

Ms Gillard, who visited submarine builder ASC at Osborne in South Australia yesterday, said the design studies would examine several areas. These would include examining four European submarine options to consider what would be required to modify them to serve the Australian navy in the Pacific and Indian oceans.

As well as the HDW and Scorpene, Navantia of Spain has proposed its S-80 submarine.

The government had also engaged Swedish submarine builder Kockums to examine the development of an evolved Collins-class submarine.

“This is a project which will unfold over decades but the early decisions on design questions, particularly, are the most critical," Ms Gillard said.